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2 years ago

Which describes the purpose of minimum-balance fees?

Business

1 answer:

Cerrena [4.2K]2 years ago

5 0

Answer:

make sure customers keep sufficient funds in their account

Explanation:

Minimum balance is the amount that an account holder has to be kept in the account. The minimum amount is to be maintained so as to enjoy the benefits of the account like receiving interests. The minimum balance defers from one bank to another. Maintaining the minimum helps in accessing loans and other facilities.

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Big Canyon Enterprises has bonds on the market making annual payments, with 18 years to maturity, a par value of $1,000, and a p

AnnyKZ [126]

Answer:

The correct answer is 8.679%.

Explanation:

According to the scenario, the given data are as follows:

Face value (F) = $1,000

Bond value (B)= $955

Time (t) = 18 years

Yield (r) = 9.2%

First we calculate the coupon payment:

Let coupon payment = C

then,

B = C × $\frac{1 - \frac{1}{(1+r)^{t} } }{r} + \frac{F}{(1+r)^{t} }$

By putting the value, we get

$955 = C× $\frac{1 - \frac{1}{(1+0.092)^{18} } }{0.092} + \frac{1000}{(1+0.092)^{18} }$

$955 = C × 8.64 + 205.11

C = 86.79

So, Coupon Rate = Coupon Payment ÷ Face value

= 86.79 ÷ 1000

= 0.08679

= 8.679%

8 0

3 years ago

Page Enterprises has bonds on the market making annual payments, with nine years to maturity, and selling for $948. At this pric

IrinaK [193]

Answer:

Coupon rate is 5.17%

Explanation:

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.

Assuming Face value of the bond is $1,000

Face value = F = $1,000

Selling price = P = $948

Number of payment = n = 9 years

Bond Yield = 5.9%

The coupon rate can be calculated using following formula

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

5.9% = [ C + ( $1,000 - $948 ) / 9 ] / [ ( $1,000 + $948 ) / 2 ]

5.9% = [ C + $5.78 ] / $974

5.9% x $974 = C + $5.78

$57.466 = C + $5.78

C = $57.466 - $5.78 = $51.686

Coupon rate = $51.686 / $1,000 = 0.051686 = 5.17%

4 0

3 years ago

Do you think that these second-wave empires hold “lessons” for for the present, or are contemporary circumstances unique as to r

Maurinko [17]

Lessons for the present
- military strategy
- brutal leaders don't last long, less moral societies don't last long
- peasants, slaves need either social mobility or a say in policy to overcome the perceived social injustice.
Classical empires continue to be used as models and inspirations.
1. Mao Zedong compared himself to Shihuangdi
2. Modern Indians pride themselves on Ashoka's nonviolence and tolerance

3 0

3 years ago

Jay's Bakery has a bond issue outstanding that matures in eight years. The bonds pay interest semiannually. Currently, the bonds

asambeis [7]

Answer:

Ans. The after tax cost of this debt is 4.8526% annual.

Explanation:

Hi, first we have to establish the amount to pay for each coupon. In our case, the coupon is paid semi-annually, so the coupon is:

$Coupon=\frac{CouponRate}{2} *100=\frac{0.057}{2} *100=2.85$

we also need to take into account that this is an eight years bond, we need to change years into semesters, so 8 years = 16 semesters.

We´re going to need MS Excel to find this value (Function "IRR"), Please see the attached excel sheet for further clarifications.

This is what it should look like

Price 97,8

Coupon 5,70% annual

Coupon 0,0285 semi-annual

taxes 21%

time 8 years

time 16 semesters

Period Cash Flow

0 97,8

1 -2,85

2 -2,85

3 -2,85

4 -2,85

5 -2,85

6 -2,85

7 -2,85

8 -2,85

9 -2,85

10 -2,85

11 -2,85

12 -2,85

13 -2,85

14 -2,85

15 -2,85

16 -102,85

Using the "IRR" function, we get 3.0255%, but this discount rate is semi-annual, and the answer we are looking for has to be effective annual, therefore, we need to use the followiong formula.

$r(Annual)=(1+0.030255)^{2 } -1=0.061425$

So our discount rate (cost of this debt) before taxes is 6.1425% annual. In order to find the after tax cost of this debt, we have to use the following formula.

$AfterTaxCost=Before TaxCost(1-Taxes)=0.061425*(1-0.21)=0.048526$

Therefore, the after tax cost of this debt is 4.8526% annual.

Best of luck.

3 0

3 years ago

On January 1, Year 1, Barnes Company issued a $100,000 installment note. The note had a 10-year term and an 8 percent interest r

Olenka [21]

Answer:

The multiple choices are as follows:

a. $100,000

b. $92,000

c. $93,097

d. $96,903

The correct option is C,$93,097

Explanation:

The principal balance of the note on January 1 year 2 is computed by first of all adding the first year interest to principal amount of $100,000 then deducting the annual principal and interest repayment of $14,903.

Find the computation below:

Opening balance of the note in year 2=$100,000+($100,000*8%)-$14,903

=$100,000+$8,000-$14,903

=$93,097

The opening balance in year 2 is $93,097

Option A is wrong because $100,000 was initial amount of the note.hence no repayment and interest have been considered.

Option B is also incorrect because $92,000 means $100,000 minus the interest on the note,whereas the interest should have been added.

8 0

3 years ago

Read 2 more answers